An empirical analysis and extension of internalization theory in emerging markets: The role of firm-specific assets and asset dispersion in the multinationality-performance relationship

This study examines the relationship between firm multinationality and financial performance with a focus on firm-specific assets and dispersion of these assets for MNCs from emerging markets. Drawing upon internalization theory, the authors reveal that while the financial performance of manufacturing MNCs depends on technological assets, service MNCs are more dependent on marketing assets to succeed in international markets. Study findings further emphasize the critical role of the industry context in emerging markets as the authors demonstrate that international asset dispersion weakens the effects of internationalization on financial performance more for MNCs in manufacturing industries than for MNCs in services.     

Financing the small firm

This study presents a framework to delineate financing the small firm. Special consideration is given to small firms' unique financing sources such as trade and bank credit, entrepreneur's own resources, informal investment, and venture capital. The small firm has limited or no access to many traditional debt and equity markets that supply long term financing to the corporate world, and therefore operates in segmented and imperfect financial markets. The links between small firms' financing opportunities and managerial goals are traced from the start-up stage through establishing a mature firm. As the small firm matures, it operates in a broader financial market. This study establishes the foundation for future empirical research.     

Internationalization stages of traditional SMEs: Increasing,decreasing and re-increasing commitment to foreign markets

SMEs attempt to accelerate and diversify their international expansion strategies. The purpose of this article is to identify the internationalization stages followed by traditional SMEs to seize global market opportunities. The authors analyze the internationalization paths of five French SMEs operating in traditional manufacturing industries. The empirical study is mainly based on 66 interviews. The findings indicate that the internationalization process of SMEs continues to follow several stages, but that their commitment to foreign markets may increase, decrease and re-increase. The identified stages, which can be triggered by internal and external factors, reflect characteristics of different internationalization models proposed in the literature.     

Competing with emerging market multinationals

A new breed of multinationals from emerging markets is appearing in many industries. Western firms are wrong to underestimate, as they often do, the competitive threat from these firms. The discussion herein highlights the non-traditional competitive advantages these firms use to win at home and abroad and shows how these firms use internationalization not only to exploit competitive advantage but to bolster it. The article concludes with suggestions for how Western managers should respond to the competitive threat from emerging market multinationals.     

Evaluating Export Promotion Programmes: U.K. Overseas Trade Missions and Export Performance

This paper examines the extent to which firms' knowledge and structural characteristics as well as firms' behaviour in foreign markets following trade mission participation impacts upon trade mission success and export performance. The findings suggest that: 1) A diversification strategy in terms of export markets benefits future expansion into new foreign markets; 2) Specific knowledge about the targeted markets should be acquired prior to participating in the trade missions; 3) Communication with potential business partners should be established prior to participating in the trade missions; and 4) The business relationships established before and during the trade missions should be cultivated through regular contacts using not only communication technology, but also regular visits. In summary, overseas trade missions contribute to the generation of incremental sales in foreign markets by enhancing the relationship-building process between business partners.     

Entrepreneurial Characteristics,Strategic Choice and Small Business Performance

Notions of entrepreneurship are central to accepted explanations of small business performance. The majority of studies exploring the growth implications of different entrepreneurial characteristics tend, however, to be partial or lack any formal structural framework. This leads to uncertainty concerning the mechanisms by which different entrepreneurial characteristics influence firm performance and the size of any effect.This paper develops a structural model of the relationships between entrepreneurial characteristics, firms' strategic choices and performance. The determinants of firms' strategic choices are then subjected to extensive empirical analysis. The results suggest a marked difference between the determinants of strategic initiatives related to management and control and those related to products, markets or managerial systems. Firms' propensity to make management and control initiatives depends almost exclusively on the characteristics of the entrepreneur. Firms' propensity to undertake initiatives related to new products, markets or management systems depends partially on the background of the entrepreneur but also reflects the firm's strategic targets, its market position and the likely operating environment.     

Internationalization and performance of Indian pharmaceutical firms

This study explores the nature of the degree of internationalization and performance (DOI‐P) relationship in the context of the Indian pharmaceutical industry. The study relies on the stages model of internationalization to posit for specific relationships between DOI and performance in the distinct stages of international expansion. The findings are different from those of similar studies on emerging markets that have used a broader set of industries in their sample. Researchers should adopt caution when making any generalization of the DOI‐P relationship across contexts. Industry context in certain instances can be more powerful than country context in shaping the DOI‐P for particular firms. © 2008 Wiley Periodicals, Inc.     

不完全竞争下区际贸易政策选择

大国的国内区际贸易可以为该国产业和企业在国际市场提供竞争力支撑。我国作为一个大国,区际贸易因贸易壁垒的广泛存在而受阻,难以为我国产业和企业在国际市场提供竞争力支撑。本文分析了不完全竞争产业区际贸易壁垒存在的经济驱动力,其基本结论是:区际贸易壁垒不仅有利于本地区厂商在本地市场中获得较大的市场份额(即地方保护效应),而且还可以增加本地区厂商的利润(即利润转移效应),并增加本地区的福利;但当所有地方政府都采取贸易保护政策时,会导致所有区域福利水平的降低,从而导致一国整体国民福利的损失。这一结论为中央政府采取相应的措施协调国内区际贸易政策以消除国内市场分割提供了理论依据。     

International network extension processes to institutionally different markets: Entry nodes and processes of exporting SMEs

This article is about how SMEs reduce their liability of network outsidership in the process of establishing a network insider position in foreign business networks. By examining how SMEs establish insidership positions in institutionally different business networks, the authors contributes to the network approach to firm internationalization. From a detailed longitudinal and retrospective case study of four SMEs from mature market entering emerging country markets and four SMEs from such immature markets entering mature markets, the authors develop propositions based on intra-group and inter-group analysis. The propositions concern the parties to which the exporter initiates and develops relationships when plugging into the foreign network (the entry node), and how the firm reaches an insider position in this network (the entry process). Three distinct network types are identified along this entry process: the exposure network, the formation network and the sustenance network.     

New venture internationalization,strategic change,and performance: A follow-up study

Although many scholars, business experts, and government agencies enthusiastically advise all firms, including new and small ventures, to internationalize, such advice does not appear to be based on empirical evidence. Few researchers have empirically examined the link between new venture performance and the internationalization of new ventures. At best, the evidence suggests that there is no significant relationship.We used a sample of 62 U.S. new venture manufacturers in the computer and communications equipment industries during the late 1980s. These industries were purportedly globalizing and may have been leading other industries into increased international operations. We found that higher levels of internationalization (percentage of foreign sales to total venture sales) were associated with higher relative market share two years later. However, there was no significant direct relationship between percentage of international sales and subsequent return on investment (ROI). Perhaps international operations simply cost more than expected. Or perhaps, as MacMillan and Day (1987) found in their study of corporate ventures over a 4-year time period, increases in market share may be a prelude to higher ROI as scale benefits translate into higher profitability. However, the 2-year time period of our study may simply not be long enough for investments in higher market shares to produce improved profits.During the 2-year study period, many of the ventures changed their level of internationalization. Of the 36 ventures who were domestic (no international sales) in the prior study, 10 expanded into international markets over the 2 years. Of the 26 originally international ventures (international sales of at least 5%), half increased their percentage of international sales, nine reduced it, and four stayed the same. Whereas the average change in international sales percentage of the ventures was only 2.9 percentage points, the large standard deviation of 13.0 percentage points, and the leptokurtic distribution (9.2) reflected the dramatic changes made by some of the ventures. Using subgroup analysis we examined these changes in percentage of international sales in conjunction with changes in strategies and performance. Ventures that had increased international sales, relative to those that had not, exhibited more positive associations between the degree of strategic change and performance as measured in terms of both relative market share and ROI. Increased international sales in technology-based new ventures seems to require simultaneous strategic changes in order to positively impact venture performance.This study is a follow-up to McDougall's (1989) finding that technology-based new ventures that had sales in foreign markets had significantly different strategies than similar ventures that sold their products only domestically. The current study enriches the previous findings by adding consideration of (1) changes in degree of internationalization, (2) changes in strategy, and (3) venture performance.Although we found no performance penalty associated with increasing international sales alone, indiscriminant advice for new ventures to sell in foreign markets without other supporting strategic actions is inconsistent with our findings. Internationalization, alone, did not lead to increased profitability.Entrepreneurs of young technology-based firms who are considering internationalization should take heed of our results. Internationalization of sales does not appear to be a simple matter of applying established strategies and procedures developed for a domestic arena. Successful internationalization appears to require changes in the venture's strategy as well.     

Top management team characteristics and firm internationalization: The moderating role of the size of middle managers

This paper examines the influence of the top management teams' (TMTs) characteristics, including tenure and international experience, on the degree of firm internationalization. In addition, this study explores the moderating effect of the size of middle managers (MMs) on the relationship between the TMT characteristics and the degree of firm internationalization. This study use the information-process perspective to emphasize that MMs provide information processing capabilities that assist TMTs as they cope with the high information-processing demands of the strategic decision-making process in international markets. We test the hypotheses using a sample of listed manufacturing firms in the electro-optical and textile industries during the 2006–2010 period. The findings indicate that TMT tenure has an inverted U-shaped relationship with firm internationalization and TMT international experience has a positively affect the firm internationalization. Furthermore, we find that large MM size positively enhances the inverted U-shaped relationship between TMT tenure and firm internationalization.     

Latin American franchise internationalization: The impact of institutional environment

We analyze the internationalization of Brazilian franchise chains in Latin America. A total of 119 observations verify international commitment in each country in relation to institutional environment factors and how they are moderated by chain size and industry. The results show that despite all institutional aspects having a significant effect, their explanatory power depends on chain size. Larger franchise chains usually choose countries with better institutional aspects in terms of contract compliance and business freedom, even if the efficiency of business conditions in these countries are not the best in Latin America. In this study, were used public data from international organizations that report on the ease of doing business, level of corruption, political risk, and legal regulations. Specifically, it contributes by using institutional theory in franchising in order to understand the process of chain internationalization originating from emerging markets. Our results, in part, contradict the idea that the origin disadvantage is always an advantage of internationalization.     

Process and intensity of internationalization of IT firms – Evidence from India

This paper provides insights and evidence related to the process and intensity of internationalization of firms in the Information Technology (IT) sector, which is the driving force of high economic growth in the Indian sub-continent during the last two decades. Research objectives were set as (i) to examine the existence of born global firms in the IT sector, (ii) to identify the process of internationalization adopted by firms in the IT industry, (iii) to measure the intensity of internationalization of IT firms. The paper is based on data collected from annual financial reports of firms listed in the CNX IT Index of National Stock Exchange of India. Two clusters were extracted using hierarchical clustering method followed by k-means clustering to analyze the characteristics of the variables. We find that the firms in both clusters are true global firms with 66 and 85% of their income from foreign markets with a very high level of international intensity. Though the findings provide some evidence for the gradual internationalization of Indian IT firms; the empirical results indicate that firm age has no impact on internationalization. The results from our study also show that firms, especially in certain industries such as IT, do have access to information that reduces the risk aversion.     

New directions for international retail joint venture research

Abstract

This paper contends that a range of questions arising from the geographical and organizational dynamics of international retail joint ventures have been bypassed by studies in the international retail field. It argues that, despite its importance as a corporate growth strategy, comparatively less is known about the way in which retailers have employed joint ventures in international markets. Based on a review of the literature and illustrated with examples of international retail joint venturing activity, this paper reveals several gaps in our understanding of the internationalization process of retail firms. Suggestions for further research are made throughout the paper on the basis of gaps in the retailer internationalization literature.     

Business motivation and informational needs in internationalization

We focus on an analysis of entrepreneurs’ motivation in business internationalization. Following on from the Regulatory Focus Theory, two differing approaches emerge: promotion (PMF) and prevention (PVF). PMF entrepreneurs approach internationalization spurred by their own motivation as opposed to PVF entrepreneurs who engage in internationalization motivated by the competitive environment. We propose that entrepreneurs’ motivational orientation depends on their prior international experience relating to business internationalization. Moreover, an internationalization strategy requires information regarding markets, barriers and support programmes. Entrepreneurs’ motivational orientation also impacts their informational concerns and alertness to informative stimuli. For the empirical application, we assess the opinions of entrepreneurs working in the Spanish natural stone sector. Findings reveal that entrepreneurs’ motivational orientation with regard to international opportunities changes as they gain experience, which at the same time alters their alertness and their informational concerns.     

Financial factors and exporting decisions

Is financial health a determinant of export market participation? Is it an outcome? Using a panel of 9292 UK manufacturing firms over the period 1993-2003, we explore the links between firms' financial health and their export market participation decisions. We find that exporters exhibit better financial health than non-exporters. Yet, when we differentiate between continuous exporters and starters, we see that this result is driven by the former. Starters generally display low liquidity and high leverage, possibly due to the sunk costs which need to be met to enter export markets. Furthermore, we find no evidence that firms enjoying better ex-ante financial health are more likely to start exporting, and strong evidence that participation in export markets improves firms' financial health.     

人民币区域化与国际化问题探讨

从目前中国现实的经济情况看,人民币国际化的时机尚未成熟,只能是一个循序渐进的长期发展过程。但人民币区域化是我国在近期可确立的较确实可行的目标。为推进人民币国际化,中国经济必须要保持在亚洲的领先增长,保持人民币币值稳定。要发展金融市场,消除金融隐患。加强与亚洲国家的贸易往来和直接投资,加快人民币的自由兑换,为人民币最终走向国际化做好必要的准备。     

Entrepreneurial orientation and international scope: The differential roles of innovativeness,proactiveness, and risk-taking

This research integrates the international business and entrepreneurship literatures by examining the independent influences of innovativeness, proactiveness, and risk-taking on the ability of a firm to broaden its scope across international markets. For each dimension of entrepreneurial orientation, a cost–benefit framework is applied to highlight the trade-offs associated with different levels in the internationalization context. Based on a unique dataset of 500 SMEs spanning 10 industries, the results reflect the consequences of being “stuck in the middle” with respect to their strategic posture on innovativeness and proactiveness, but reveal a nuanced role for risk-taking behavior. The non-uniform and non-linear relationships from the findings contribute to a better understanding of when the individual dimensions of entrepreneurial orientation help or hinder entrepreneurial firms in the internationalization process.     

Credit constraints and firm export: Microeconomic evidence from Italy

This paper estimates the impact of credit rationing on firms' export. We use detailed survey data from Italian manufacturing firms that provide a firm-specific measure of credit rationing based directly on firms' responses to the survey rather than indirectly on firms' financial statements. After controlling for productivity and other relevant firm attributes, and accounting for the endogeneity of credit rationing, we find that the probability of exporting is 39% lower for rationed firms and that rationing reduces foreign sales by more than 38%. While credit rationing also appears to depress domestic sales, its impact on foreign sales is significantly stronger. The analysis also suggests that credit rationing is an obstacle to export especially for firms operating in high-tech industries and in industries that heavily rely on external finance.